What are the Labour Law Aspects of the Third Slovenian COVID-19 Law Proposal?

working-time

What are the Labour Law Aspects of the Third Slovenian COVID-19 Law Proposal?

Authors: Kaja Baskovic, Darja Miklavcic, SELIH & PARTNERJI Law Firm

On 20 May 2020 the Slovenian Government adopted a Proposal of the Act Determining the Intervention Measures to Contain and Mitigate the COVID-19 Consequences (hereinafter “Proposal”) and proposed it for adoption to the Slovenian Parliament. We are presenting the proposed solutions in the area of labour law and the specifics of proposed solutions for sectors of tourism and catering that are expected to enter into force if the Proposal is adopted by the Slovenian Parliament in the proposed wording.

1.   Part-time work

The main provisional measure proposed in the area of labour relationships is partial reimbursement of part-time work. The Proposal stipulates that the employer will be able to order full time employees to perform work part-time while at the same time ordering them to temporarily wait for work. The employer will be able to order part-time work between 1 June 2020 and at the latest 31 December 2020. While doing so, the employer will need to follow two restrictions, namely, that (i) each employee will have to work at least half of the working time, and (ii) it will not be possible to order part-time work to employees during their notice period. Additionally, employers will not be able to order part-time work to employees who are working part-time on the basis of social security rights.

Eligible employer

Before a decision on part-time work can be adopted, the employer will need to consult with the trade union at the employer or – if no such trade union exists – with the works council, and obtain their respective written opinion. According to the Proposal, these consultations should take place every time the circumstances of work change. If there is no trade union nor works council at the employer, the employer will have to notify employees in the usual way prior to adoption of decision on part-time work.

Any employer who will implement part-time work pursuant to the Proposal will be eligible to obtain partial reimbursement (subsidy) provided that such employer:

  • is a legal or natural person who was registered at the Slovenian Business Register as of 13 March 2020 and is employing full time employees;
  • assesses he cannot provide at least 10% of his employees with at least 90% of the work load; and
  • is not a direct or indirect beneficiary of the state or municipal budget, whose share of revenue from public sources in 2019 was higher than 50%.

If the above conditions are fulfilled (which will have to be confirmed by a written statement each month), the employer will be able to claim the subsidy monthly, for the previous month.

If an employer orders part-time work to some of his employees, he will need to notify the Employment Service of Slovenia (hereinafter “Employment Service”) within 3 working days from the order.

Employee’s rights and obligations

An employee who will temporarily be working part-time will retain all rights and obligations arising from his employment relationship, unless they have been changed with the Proposal. Accordingly, such employee will be entitled to payment for the time of actual performance of work and salary compensation for the time of waiting for work in the same amount as provided for in the Employment Relationships Act for cases of not performing work due to incapability to provide work for business reasons; such employee shall be obliged to return to work full time following the employer’s order to do so. If an employee is absent from work because of other reasons, such employee will be eligible to receive salary compensation as provided by law. During this period the received subsidy will also be proportionate.

Part-time work must be ordered in writing. The order must determine the scope of part-time work, the duration of part-time work, the distribution of working hours or the method of distributing working hours, the duration of breaks during work, the amount of reimbursement of work-related costs, the amount of salary compensation and the possibilities and the manner in which the employer orders the employee to return to work full time.

Subsidy for employers

The subsidy will be granted to the employer based on a subsidy application addressed to the Employment Service, together with the evidence on fulfilment of the applicable conditions. Moreover, the employer will also need to commit not to violate the prohibition of dismissal during the period of receiving the subsidy and an additional month after that (more on this prohibition will be discussed later). If the employer’s application will be granted (the Employment Service will need to notify him within 15 days), he will need to conclude a contract on subsidies with the Employment Service (hereinafter “Contract”).

Subsidies will be paid to employers in monthly instalments, at the latest in 30 days after signing the Contracts. The Proposal foresees subsidies in the following amounts:

  • EUR 448 monthly for part-time work ranging from 20 to 24 hours a week;
  • EUR 336 monthly for part-time work ranging from 25 to 29 hours a week;
  • EUR 224 monthly for part-time work ranging from 30 to 34 hours a week; and
  • EUR 112 monthly for part-time work of 35 hours per week.

This subsidy can be combined with other measures intended to maintain jobs, however the combined aid cannot lead to excessive compensations of costs per individual employee.

Employer’s obligations

Any employer ordering employees to work part-time will need to periodically pay proportional parts of their salaries and salary compensations, respectively. Additionally, it shall not be allowed to:

  • during the period of receiving the subsidy and for an additional month thereafter start dismissal proceedings for business reasons with respect to an employee who has been ordered to work part-time and/or dismiss a higher number of employees, unless such redundancy program has been adopted before 13 March 2020 and the employer did not claim subsidies for the employees subject to such redundancy program, neither under the Proposal nor under the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy (ZIUZEOP); and
  • during the period of receiving the subsidy order over time work or distribute working time unevenly if the respective work could have been performed by the employees temporarily waiting for work.

The employer will need to record employees’ working time, including commencement and cessation of work each working day.

Control and publicly accessed data, return of the received funds, sanctions

If an employer does not fulfil the conditions set forth in the Proposal or does not notify the Employment Service about the order of part-time work within 3 days, he will need to return the received funds with the statutory default interest.

Provisions regarding liquidation procedures pursuant to the Proposal are the same as under ZIUZEOP: if such proceedings are initiated during the period of receipt of the subsidy or during a subsequent period equal to the period of receipt of the subsidy, the received subsidy will need to be returned with statutory default interest. The same consequence is foreseen if the employer distributes profits, purchases own shares or own business shares, or pays awards to management or part of salaries for business performance to management in 2020 or for 2020.

Supervision over granting and payments of subsidies will be conducted by the Employment Service, while inspection will be carried out by the Labour Inspectorate of the Republic of Slovenia. Additionally, the Employment Service will publish at its web pages a list of subsidy recipients and the amount of received subsidies.

Breach of conditions, set forward with the Proposal can lead to high penalties for employers and their respective responsible persons.

Voluntary applicability of the measure

Part-time work can also be ordered by employers who will not be eligible for a subsidy or will not even apply for a subsidy.

2.   Measures aiding the sectors of tourism and catering

Salary compensation reimbursement for employees temporarily waiting for work

The Proposal regulates reimbursement of salary compensations paid to employees whom employers in the field of tourism, catering or supplementary farming activity cannot provide work due to the consequences of epidemic. Employers entitled to such measures are those that have one of the following registered main activities:

  • 10 – Hotels and other similar accommodation establishments activities;
  • 20 – Holiday homes or similar short-stay accommodation establishments activities;
  • 30 – Camping activities;
  • 10 – Restaurants and mobile food service activities;
  • 79 – Activities of travel agencies, tour operators and travel-related activities;
  • 30 – Activity of organising exhibitions, fairs and meetings;
  • 020 – Accompanying activities for artistic performance;
  • 040 – Operation of facilities for cultural events;
  • 001 – Activity of casinos; and
  • 391 – Activity of long distance and other road passenger transport.

Measures pursuant to the Proposal will be available to employers whose revenues in the year 2020 will decrease by at least 10% compared to 2019. If the employer has not been in business throughout the entire year 2019 or 2020, respectively, he is entitled to the measures if the average monthly revenues in 2020 will be more than 10% lower than the average monthly revenues in 2019. Employers who have not yet operated in 2019 at all are eligible for the measures if their average monthly revenue in 2020 will reduce by more than 10% due to the epidemic compared to the average monthly revenue prior to 12 March 2020. The subsidies will be granted on the basis of each respective employee’s estimate of the above figures. If subsequently, while reviewing the annual reports for the year 2020, it turns out that the conditions have not been fulfilled, the employers will have to return the received funds.

An additional condition for the right to reimbursement is that the order for employees to temporarily wait for work has to be issued at the latest on 30 June 2020. Employers will not be entitled to reimbursement if they have not paid taxes or other amounts collected by the tax authorities, if they have open liabilities as of the date of the application for reimbursement and/or if they are subject to bankruptcy proceedings.

The rights and obligations of employees waiting for work at home are the same as provided for the temporary waiting for work under ZIUZEOP. This means that employees retain all rights and obligations that arise from employment relationship, and are entitled to salary compensation in the amount the Employment Relationships Act stipulates for inability to provide work due to business reasons (i.e. compensation of 80% of the salary). Employees are obliged to return to work for up to seven days if the employer orders them to do so, after having notified the Employment Service.

Despite all similarities, the subsidy amount will be different than stipulated by the ZIUZEOP: the Republic of Slovenia will reimburse up to 80% of the employees’ salary compensation, however, not more than the maximum unemployment benefit as determined by the Labour Market Regulation Act (i.e. EUR 892.50 gross per employee). The mentioned 80% reimbursement includes salary compensation as well as all social security contributions. Additionally, the amount of received reimbursement cannot exceed 80% of the paid compensation, therefore the remaining 20% of the salary compensation and social security contributions shall be covered by the employer. If an employer is a direct or indirect state or municipal budget beneficiary whose share of public revenue funds is lower than 70%, such employer will be eligible for a proportionate reimbursement.

The right to the reimbursement of the paid salary compensations may be claimed with the submission of an online application to the Employment Service within 8 days following the order for employees to temporarily wait for work, however not later than by 30 June 2020. Such application will need to also contain a statement on assessed revenue decrease, and employers shall be liable under criminal and tort law for the correctness of such statement. The Employment Service will need to deliberate on the received application within 15 days.

While receiving the reimbursement, employers will be obliged to pay salary compensations to their employees, will be prevented from ordering overtime work (if such work could have been performed by the employees waiting for work) and will have to inform the Employment Service in advance if they decide to summon employees back to work. If an employer breaches these rules, he will need to refund the triple of the received funds. Also, if liquidation proceedings are initiated during the period of receipt of the subsidy or during a subsequent period equal to the period of receipt of the subsidy, the received subsidy will need to be returned with statutory default interest.

Inspection control over this part of the Act will be performed by the Labour Inspectorate of the Republic of Slovenia.

Vouchers to stimulate domestic tourism

The Proposal introduces vouchers aimed at eliminating the consequences of the epidemic in tourism in order to improve the economic situation in the field of consumption of domestic tourism (hereinafter “Voucher”). Each individual permanently residing in the Republic of Slovenia as of 13 March 2020 is eligible to receive such Voucher. If the said individual already reached the age of maturity or will complete 18 years in 2020, she will receive a Voucher for EUR 200, otherwise the value of the Voucher will equal EUR 50.

Such Vouchers may be redeemed with entities registered in the Republic of Slovenia and entered into the Register of Accommodation Establishments at the Agency of the Republic of Slovenia for Public Legal Records and Related Services, performing activities from the following sectors:

  • 10 – Hotels and other similar accommodation establishments activities;
  • 20 – Holiday homes or similar short-stay accommodation establishments activities; and
  • 30 – Camping activities.

The Voucher will be issued to the beneficiary’s name and will be redeemable for an overnight stay or a bed and breakfast before 31 December 2020. Personal income tax will not be paid for the value of the Voucher.

The service provider will receive the cashed in funds from the Financial Administration of the Republic of Slovenia (hereinafter “FURS”). The manner of redeeming the voucher and the manner of reimbursing funds by the FURS will be prescribed by the Government in a decree within eight days of the entry of the Proposal into force.

Supervision of service providers will be performed by the Market Inspectorate of the Republic of Slovenia, to which FURS will provide the necessary data, namely data on the service provider including registration and tax number, and data on the person who redeemed the voucher with his tax number and date of his arrival and departure.

3.   Intervention Measures Act in the field of salaries and contributions becomes partially inapplicable

Pursuant to the Proposal, a part of the Act on the Interim Measure of Partial Reimbursement of Wage Compensation related to partial reimbursement of salary compensations shall become inapplicable when the Proposal enters into force. The rest of the Act, namely the part relating to the deferral of payment of contributions, will stay in force.

Authors: Kaja Baskovic, Darja Miklavcic, SELIH & PARTNERJI Law Firm

On 20 May 2020 the Slovenian Government adopted a Proposal of the Act Determining the Intervention Measures to Contain and Mitigate the COVID-19 Consequences (hereinafter “Proposal”) and proposed it for adoption to the Slovenian Parliament. We are presenting the proposed solutions in the area of labour law and the specifics of proposed solutions for sectors of tourism and catering that are expected to enter into force if the Proposal is adopted by the Slovenian Parliament in the proposed wording.

1.   Part-time work

The main provisional measure proposed in the area of labour relationships is partial reimbursement of part-time work. The Proposal stipulates that the employer will be able to order full time employees to perform work part-time while at the same time ordering them to temporarily wait for work. The employer will be able to order part-time work between 1 June 2020 and at the latest 31 December 2020. While doing so, the employer will need to follow two restrictions, namely, that (i) each employee will have to work at least half of the working time, and (ii) it will not be possible to order part-time work to employees during their notice period. Additionally, employers will not be able to order part-time work to employees who are working part-time on the basis of social security rights.

Eligible employer

Before a decision on part-time work can be adopted, the employer will need to consult with the trade union at the employer or – if no such trade union exists – with the works council, and obtain their respective written opinion. According to the Proposal, these consultations should take place every time the circumstances of work change. If there is no trade union nor works council at the employer, the employer will have to notify employees in the usual way prior to adoption of decision on part-time work.

Any employer who will implement part-time work pursuant to the Proposal will be eligible to obtain partial reimbursement (subsidy) provided that such employer:

  • is a legal or natural person who was registered at the Slovenian Business Register as of 13 March 2020 and is employing full time employees;
  • assesses he cannot provide at least 10% of his employees with at least 90% of the work load; and
  • is not a direct or indirect beneficiary of the state or municipal budget, whose share of revenue from public sources in 2019 was higher than 50%.

If the above conditions are fulfilled (which will have to be confirmed by a written statement each month), the employer will be able to claim the subsidy monthly, for the previous month.

If an employer orders part-time work to some of his employees, he will need to notify the Employment Service of Slovenia (hereinafter “Employment Service”) within 3 working days from the order.

Employee’s rights and obligations

An employee who will temporarily be working part-time will retain all rights and obligations arising from his employment relationship, unless they have been changed with the Proposal. Accordingly, such employee will be entitled to payment for the time of actual performance of work and salary compensation for the time of waiting for work in the same amount as provided for in the Employment Relationships Act for cases of not performing work due to incapability to provide work for business reasons; such employee shall be obliged to return to work full time following the employer’s order to do so. If an employee is absent from work because of other reasons, such employee will be eligible to receive salary compensation as provided by law. During this period the received subsidy will also be proportionate.

Part-time work must be ordered in writing. The order must determine the scope of part-time work, the duration of part-time work, the distribution of working hours or the method of distributing working hours, the duration of breaks during work, the amount of reimbursement of work-related costs, the amount of salary compensation and the possibilities and the manner in which the employer orders the employee to return to work full time.

Subsidy for employers

The subsidy will be granted to the employer based on a subsidy application addressed to the Employment Service, together with the evidence on fulfilment of the applicable conditions. Moreover, the employer will also need to commit not to violate the prohibition of dismissal during the period of receiving the subsidy and an additional month after that (more on this prohibition will be discussed later). If the employer’s application will be granted (the Employment Service will need to notify him within 15 days), he will need to conclude a contract on subsidies with the Employment Service (hereinafter “Contract”).

Subsidies will be paid to employers in monthly instalments, at the latest in 30 days after signing the Contracts. The Proposal foresees subsidies in the following amounts:

  • EUR 448 monthly for part-time work ranging from 20 to 24 hours a week;
  • EUR 336 monthly for part-time work ranging from 25 to 29 hours a week;
  • EUR 224 monthly for part-time work ranging from 30 to 34 hours a week; and
  • EUR 112 monthly for part-time work of 35 hours per week.

This subsidy can be combined with other measures intended to maintain jobs, however the combined aid cannot lead to excessive compensations of costs per individual employee.

Employer’s obligations

Any employer ordering employees to work part-time will need to periodically pay proportional parts of their salaries and salary compensations, respectively. Additionally, it shall not be allowed to:

  • during the period of receiving the subsidy and for an additional month thereafter start dismissal proceedings for business reasons with respect to an employee who has been ordered to work part-time and/or dismiss a higher number of employees, unless such redundancy program has been adopted before 13 March 2020 and the employer did not claim subsidies for the employees subject to such redundancy program, neither under the Proposal nor under the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy (ZIUZEOP); and
  • during the period of receiving the subsidy order over time work or distribute working time unevenly if the respective work could have been performed by the employees temporarily waiting for work.

The employer will need to record employees’ working time, including commencement and cessation of work each working day.

Control and publicly accessed data, return of the received funds, sanctions

If an employer does not fulfil the conditions set forth in the Proposal or does not notify the Employment Service about the order of part-time work within 3 days, he will need to return the received funds with the statutory default interest.

Provisions regarding liquidation procedures pursuant to the Proposal are the same as under ZIUZEOP: if such proceedings are initiated during the period of receipt of the subsidy or during a subsequent period equal to the period of receipt of the subsidy, the received subsidy will need to be returned with statutory default interest. The same consequence is foreseen if the employer distributes profits, purchases own shares or own business shares, or pays awards to management or part of salaries for business performance to management in 2020 or for 2020.

Supervision over granting and payments of subsidies will be conducted by the Employment Service, while inspection will be carried out by the Labour Inspectorate of the Republic of Slovenia. Additionally, the Employment Service will publish at its web pages a list of subsidy recipients and the amount of received subsidies.

Breach of conditions, set forward with the Proposal can lead to high penalties for employers and their respective responsible persons.

Voluntary applicability of the measure

Part-time work can also be ordered by employers who will not be eligible for a subsidy or will not even apply for a subsidy.

2.   Measures aiding the sectors of tourism and catering

Salary compensation reimbursement for employees temporarily waiting for work

The Proposal regulates reimbursement of salary compensations paid to employees whom employers in the field of tourism, catering or supplementary farming activity cannot provide work due to the consequences of epidemic. Employers entitled to such measures are those that have one of the following registered main activities:

  • 10 – Hotels and other similar accommodation establishments activities;
  • 20 – Holiday homes or similar short-stay accommodation establishments activities;
  • 30 – Camping activities;
  • 10 – Restaurants and mobile food service activities;
  • 79 – Activities of travel agencies, tour operators and travel-related activities;
  • 30 – Activity of organising exhibitions, fairs and meetings;
  • 020 – Accompanying activities for artistic performance;
  • 040 – Operation of facilities for cultural events;
  • 001 – Activity of casinos; and
  • 391 – Activity of long distance and other road passenger transport.

Measures pursuant to the Proposal will be available to employers whose revenues in the year 2020 will decrease by at least 10% compared to 2019. If the employer has not been in business throughout the entire year 2019 or 2020, respectively, he is entitled to the measures if the average monthly revenues in 2020 will be more than 10% lower than the average monthly revenues in 2019. Employers who have not yet operated in 2019 at all are eligible for the measures if their average monthly revenue in 2020 will reduce by more than 10% due to the epidemic compared to the average monthly revenue prior to 12 March 2020. The subsidies will be granted on the basis of each respective employee’s estimate of the above figures. If subsequently, while reviewing the annual reports for the year 2020, it turns out that the conditions have not been fulfilled, the employers will have to return the received funds.

An additional condition for the right to reimbursement is that the order for employees to temporarily wait for work has to be issued at the latest on 30 June 2020. Employers will not be entitled to reimbursement if they have not paid taxes or other amounts collected by the tax authorities, if they have open liabilities as of the date of the application for reimbursement and/or if they are subject to bankruptcy proceedings.

The rights and obligations of employees waiting for work at home are the same as provided for the temporary waiting for work under ZIUZEOP. This means that employees retain all rights and obligations that arise from employment relationship, and are entitled to salary compensation in the amount the Employment Relationships Act stipulates for inability to provide work due to business reasons (i.e. compensation of 80% of the salary). Employees are obliged to return to work for up to seven days if the employer orders them to do so, after having notified the Employment Service.

Despite all similarities, the subsidy amount will be different than stipulated by the ZIUZEOP: the Republic of Slovenia will reimburse up to 80% of the employees’ salary compensation, however, not more than the maximum unemployment benefit as determined by the Labour Market Regulation Act (i.e. EUR 892.50 gross per employee). The mentioned 80% reimbursement includes salary compensation as well as all social security contributions. Additionally, the amount of received reimbursement cannot exceed 80% of the paid compensation, therefore the remaining 20% of the salary compensation and social security contributions shall be covered by the employer. If an employer is a direct or indirect state or municipal budget beneficiary whose share of public revenue funds is lower than 70%, such employer will be eligible for a proportionate reimbursement.

The right to the reimbursement of the paid salary compensations may be claimed with the submission of an online application to the Employment Service within 8 days following the order for employees to temporarily wait for work, however not later than by 30 June 2020. Such application will need to also contain a statement on assessed revenue decrease, and employers shall be liable under criminal and tort law for the correctness of such statement. The Employment Service will need to deliberate on the received application within 15 days.

While receiving the reimbursement, employers will be obliged to pay salary compensations to their employees, will be prevented from ordering overtime work (if such work could have been performed by the employees waiting for work) and will have to inform the Employment Service in advance if they decide to summon employees back to work. If an employer breaches these rules, he will need to refund the triple of the received funds. Also, if liquidation proceedings are initiated during the period of receipt of the subsidy or during a subsequent period equal to the period of receipt of the subsidy, the received subsidy will need to be returned with statutory default interest.

Inspection control over this part of the Act will be performed by the Labour Inspectorate of the Republic of Slovenia.

Vouchers to stimulate domestic tourism

The Proposal introduces vouchers aimed at eliminating the consequences of the epidemic in tourism in order to improve the economic situation in the field of consumption of domestic tourism (hereinafter “Voucher”). Each individual permanently residing in the Republic of Slovenia as of 13 March 2020 is eligible to receive such Voucher. If the said individual already reached the age of maturity or will complete 18 years in 2020, she will receive a Voucher for EUR 200, otherwise the value of the Voucher will equal EUR 50.

Such Vouchers may be redeemed with entities registered in the Republic of Slovenia and entered into the Register of Accommodation Establishments at the Agency of the Republic of Slovenia for Public Legal Records and Related Services, performing activities from the following sectors:

  • 10 – Hotels and other similar accommodation establishments activities;
  • 20 – Holiday homes or similar short-stay accommodation establishments activities; and
  • 30 – Camping activities.

The Voucher will be issued to the beneficiary’s name and will be redeemable for an overnight stay or a bed and breakfast before 31 December 2020. Personal income tax will not be paid for the value of the Voucher.

The service provider will receive the cashed in funds from the Financial Administration of the Republic of Slovenia (hereinafter “FURS”). The manner of redeeming the voucher and the manner of reimbursing funds by the FURS will be prescribed by the Government in a decree within eight days of the entry of the Proposal into force.

Supervision of service providers will be performed by the Market Inspectorate of the Republic of Slovenia, to which FURS will provide the necessary data, namely data on the service provider including registration and tax number, and data on the person who redeemed the voucher with his tax number and date of his arrival and departure.

3.   Intervention Measures Act in the field of salaries and contributions becomes partially inapplicable

Pursuant to the Proposal, a part of the Act on the Interim Measure of Partial Reimbursement of Wage Compensation related to partial reimbursement of salary compensations shall become inapplicable when the Proposal enters into force. The rest of the Act, namely the part relating to the deferral of payment of contributions, will stay in force.